Joe Studwell Explores Africa’s Manufacturing Future in New Book

In a recent conversation, economist and author Joe Studwell discussed his new book, How Africa Works: Success and Failure in the World’s Last Developmental Frontier, with economist Tyler Cowen. The dialogue tackled critical questions about Africa’s potential for manufacturing, the impacts of population density on development, and the legacy of colonial borders. The conversation highlighted both challenges and opportunities for the continent’s economic future.

Studwell expressed optimism about Africa’s manufacturing prospects, noting that labor costs in some countries are significantly lower than in China, with figures as low as $60 per month in places like Ethiopia and Madagascar. He pointed out that many African nations are well-positioned to start their manufacturing journeys, beginning with textiles and garments, a sector already seeing activity in countries like Morocco and Lesotho.

According to Studwell, the trend of moving production to Africa is gaining momentum, particularly as Chinese firms look for cost-effective alternatives. He stated, “Africa is now in a position where the cost of labor is now between a half and one-tenth of what it is in China.” This shift is essential for countries like Ethiopia, which is attempting to recover from a civil war that disrupted its economic plans.

The discussion also delved into the role of technology in manufacturing. Studwell challenged the notion that advancements in robotics and artificial intelligence would hinder Africa’s manufacturing growth. He emphasized that the high upfront costs of robots—often exceeding $100,000—make them less viable compared to the low labor costs in many African countries. “In garmenting and textiles, robots don’t work very well,” he explained, highlighting that human labor remains more adaptable to changing demands.

The conversation examined the broader context of manufacturing in developing countries. Cowen raised concerns about the experiences of nations like India and Thailand, where manufacturing has not flourished as expected. He pointed out that even in advanced economies such as the United States, manufacturing employment has dropped sharply from 37 percent to around 7-8 percent of the workforce.

In response, Studwell highlighted that South Africa’s deindustrialization is largely due to policy missteps rather than an inevitable trend. He noted that before the end of apartheid, South Africa had a robust manufacturing sector supported by protective policies. This historical context underscores the potential for African countries that actively pursue manufacturing strategies.

Transportation costs, energy expenses, and political stability emerged as critical factors in determining where manufacturing firms might establish operations. Studwell argued that the demand for manufactured goods will remain strong globally, suggesting that despite challenges, there are significant opportunities for African nations willing to engage in manufacturing.

In conclusion, the conversation between Studwell and Cowen provided valuable insights into the complexities of Africa’s economic landscape. As nations like Ethiopia and Madagascar strive to capitalize on their labor advantages, the future of manufacturing in Africa remains a topic of significant interest and potential.